Peloton’s biggest problem with digital advertising is that it’s difficult to succinctly explain its product in a banner ad.
The four-year-old company, which started on Kickstarter but projects $150 million in revenue this year, sells exercise bikes with video screens. It also live-streams classes funded by monthly subscriptions, sells bikes in showrooms and runs an exercise studio where classes are filmed live.
That’s a marketing mouthful for CMO Lori Marcus, a PepsiCo vet who was hired from Keurig in April. She now finds herself taking the reins at a young but profitable organization that has built a robust marketing operation, with TV, out-of-home and digital among its marketing channels.
Marus talked to AdExchanger about her plans for Peloton, how the company is gathering and analyzing data (it’s still early) and when digital advertising makes sense for the brand (social media is big).
AdExchanger: Peloton is a bit unusual for a startup because it’s growing and it’s profitable. Why is that?
LORI MARCUS: We are very focused on growth, but we are focused on growing fast in a really smart and profitable way. When I first met with this company, I was really impressed with their business model. We are not looking to make a lot of money selling bikes [they sell for $1,995], but we are not looking to lose money selling bikes. We are filming 12 classes a day at a studio where people are paying $30 to take a ride, and have a subscription model for $39 per month.
What does your marketing mix look like now?
We’ve used a fair amount of traditional broadcast media. Peloton is not just a better-designed bicycle – it’s a home bike that brings you live and on-demand cycle spinning classes to your home. It’s not something you can say in one word. It takes explanation. That’s why we have done TV in the past, and that’s why we just shot a “brand film” two weeks ago in LA.
We’ve done a fair amount of transit advertising, on places like the Metro North [in the New York City area], because it’s the right demographic: busy, educated, fitness-oriented people who are on the train at 7:30 a.m. and don’t have the time to go to Flywheel or SoulCycle.
What about online advertising?
Digital marketing is not as easy for Peloton as it is for marketers in a category with a million reference points, like chewing gum. We are a new “that thing,” and we have very low brand awareness. We have to figure out how to capture the right, succinct message for where people are in their consumer journey.
Peloton has customers paying monthly subscriptions, making loyalty important. Where are you in building out a CRM?
We are at the early stages. We have an email marketing program. We do have a secret sauce [with our customers]. The engagement of our rider group is like nothing I have ever seen before. I would have paid money to get moms that were that engaged when I was at The Children’s Place. As a marketer, it’s a dream to have such an engaged group. They form subgroups online to encourage each other about their rides.
What marketing segments do you have?
Our traditional advertising focuses on the most marquee or universal target: the 30- to 50-plus-year-old, who is slightly affluent, suburban, educated, slightly female. This person is fitness-involved but time-starved. It’s the 35-year-old version of me.
A large segment of our riders are outdoor cyclists who need an indoor training ritual, whether it’s because it’s winter in Minneapolis or because it’s not safe to ride when it’s dark at 5 a.m.
Another segment is people who have never worked out before or are low-involvement exercisers. They don’t feel safe physically or emotionally riding to Flywheel or JoyRide. They need to get fit in the “safety” of their own home.
We see them forming groups online on Facebook. We have the official Peloton riders Facebook page, and there are other Facebook pages for moms, ones that are geographic in nature, like riders in the Northeast. It’s more tribe-oriented than it is a traditional demographic.
How are you able to use that brand love in the rider community in Peloton’s marketing?
Because we have such a passionate, engaged user group, they are our best source for referrals. We have a very nascent referral program where you can get two months added on to your subscription, but right now it’s hard to find.
One, we are going to make sure that the refer-a-friend program is easy to find and share on Facebook. The second thing, two years in [to the current program], is to see how effective that program is, or if there is something else in our marketing that’s more powerful.
How does paid social media perform well for you, since organic is so big?
Facebook is the biggest social network for us, and it’s a very important part of our acquisition strategy. Facebook has very sophisticated modeling they are able to do, both in terms of the behavior consumers exhibit on Facebook and their ability to use third-party data. And when you see an ad on TV and check out our site, we can track you and talk to you on Facebook and other digital media forums.
How many sales happen online versus the showroom?
Most of our sales are online. The sales and marketing boutique is really [there] to get [people] on the bike and try it. People may gain awareness through our traditional advertising, they may go into a boutique to try the bike and are followed up by people in the store, a series of emails and then buy online. We are getting more sophisticated in being able to track consumers through that journey and finding the right messages and vehicles to move them along in that journey. Even if they ultimately ended up buying it online, an influential part might have been going to the boutique at Westchester mall.
What do you do in house and what do you do with an agency?
For our signature brand marquee work, our brand film, we worked with the boutique agency Partners & Spade. They do beautiful, visual high-end work and can tell a beautiful brand story. We have an in-house creative services team that can turn a lot of that into things you’ll see on digital. Going forward, we might also supplement that with boutique agencies that are experts in the direct-response area.
What about media buying?
We use some external agencies that help us on print and traditional broadcast, and we do digital in-house.
What role does data play in Peloton’s marketing?
We have a small but very powerful analytics team here. It’s a new team for us. We have a great need and desire for them to support all elements of the acquisition team and all elements of the engagement and social media marketing team. Everyone in marketing is dying to be supported by this BI [business intelligence] and data analytics team. It’s really a question of crawl, walk, run.
What role does programmatic play in your marketing?
We are doing some programmatic in the digital space, and more and more of that will happen over time. But we are a higher-end, aspirational brand. We are going to be conscious of where our messaging is and where people interact with our brand. Programmatic is helpful in some ways, but we have to be conscious of context as well.
As consumer attention shifts to new places, how are you thinking about reaching your potential customers?
A large part of our demo is the 30-plus suburban, affluent mom who spends a lot of time on Facebook. We have our engaged rider community there, which is important for us both in customer acquisition and in loyalty and retention. Each of our teachers now has their own Facebook page.
But I’ve challenged our team to think about other platforms. My 18-year-old daughter is on Snapchat. As that demographic gets married and goes on to different life stages, will Facebook still be the platform of choice or will it be a platform like Instagram or Snapchat? We are small, so we can’t be on everything under the sun, but we need to be nimble on social media platforms.
What is your most effective marketing channel right now?
I’m a big believer that these things work in concert with each other, so I don’t want to say one in particular. When we run TV, we see interest. People search and get to our website. In concert with that, we do paid search and banner ads. But it’s not any one of these things in a vacuum; it’s a network effect of how they work together. One thing I want my team to look at is not just attribution modeling, but how these things work together.
This interview has been condensed and edited.
